Question

Marwick's Pisnos, Inc., purchases pianos from a large manufacturer for an average cost of $1,520 per unit and then sells them to retail customers for an average price of $2.800 esch. The company's selling and administrative costs for a typical month are presented below: Cost Formula Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities Administrative: Executive salaries $957 per month $4,773 per month, plus 5% of sales $61 per piano sold $668 per month $5.836 per month $13, 512 per month clerical Depreciation of office equipment $2,478 per month, plus 543 per piano sold $868 per month During August, Marwick's Pianos, Inc., sold and delivered 62 pianos. Required: 1. Prepare a traditional format income statement for August. 2. Prepare a contribution format income statement for August Show costs and revenues on both a total and a per unit basis down through contribution margin. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a traditional format income statement for August. (A "Net operating loss" should be entered as a negative number) Marwick's Planos, Inc $ 173,600 79 380 Traditional Income Statement For the Month of August Sales Cost of goods sold Gross margin Selling and administrative expenses Seling expenses PS 9571 Sales salaries and commissions 13,453 Uslities 668 Depreciation of sales facilities 5,036 Delivery of pianos 3.7821 23.896 Total selling expenses Administrative expenses Insurance 715 13.5121 Executive salaries Depreciation of office equipment Clerical 868 5.144 20.239 Total administrative expenses Total selling and administrative expenses et operating income 44.135 Required 2 >

Answer 1

Solution

Marwick's Pianos Inc
Traditional Income Statement
For the Month of August
Sales revenue		$     173,600.00
Less: Cost of Goods sold		$       94,240.00
Gross Profit		$       79,360.00
Selling and Administrative Expenese
Selling Expenses
Advertising	$             957.00
Sales salaries and Commission	$       13,453.00
Delivery Expense	$          3,782.00
Utilities	$             668.00
Depreciation of sales facility	$          5,036.00
Total Selling Expenses	$       23,896.00
Administrative Expenses
Executive Salaries	$       13,512.00
Insurance	$             715.00
Clerical	$          5,144.00
Depreciation- Office Equipment	$             868.00
Total Administrative expenses	$       20,239.00
Total Selling and Administrative Expenese		$       44,135.00
Net income		$       35,225.00

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Marwick's Pianos Inc
Contribution formal Income statement
For the Month of August
	Total	Per Piano
Sales	$     173,600.00	$         2,800.00
variable Expenses
Direct material cost	$       94,240.00	$         1,520.00
Variable Sales salaries and Commission	$          8,680.00	$             140.00
Delivery Expenses	$          3,782.00	$               61.00
Clerical	$          2,666.00	$               43.00
Total Variable Cost	$     109,368.00	$         1,764.00
Contribution Margin	$       64,232.00	$         1,036.00
Fixed costs
Advertising	$             957.00
Fixed Sales salaries and Commission	$          4,773.00
Utilities	$             668.00
Depreciation- Sales Facility	$          5,036.00
Executive salaries	$       13,512.00
Insurance	$             715.00
Clerical fixed cost	$          2,478.00
Depreciation- Office equipment	$             868.00
Total Fixed cost	$       29,007.00
Net Income	$       35,225.00